After the algorithmic stablecoin UST suffered a devastating blow last week, regulators in various countries have also expressed their opinions. The U.K. has said it stands ready to take further action on stablecoins, with issuers such as Tether and Circle likely to be brought into regulation. The Korea Financial Supervisory Authority also said it is investigating LUNA and expects to speed up the formulation of the Basic Law on Digital Assets, including consumer protection, and implement it in 2024. (Recap:The Queen of England speaks!Directing cryptocurrency regulation, combating illicit finance, enhancing the ability to seize and recover encrypted assets) (background supplement:U.S. Treasury Secretary Yellen: Terra is a real case of stablecoin risk, CDBC may be a check and balance)
Regulators also appear to be increasingly concerned about the development of stablecoins after LUNA and UST crashed last week, wiping off tens of billions of dollars in market value. According to The Telegraph, U.K. Treasury officials say they stand ready to take further action on stablecoins to include them in electronic payments regulation. A Treasury spokesman said:
Legislation regulating stablecoins as a means of payment will be part of the Financial Services and Markets Act announced in the Queen’s Speech.
This will create the conditions for issuers and service providers to operate and grow in the UK, while ensuring financial stability and high regulatory standards so that these new technologies can be used safely and securely.
The United Kingdom delivered the Queen’s Speech last week, with two bills, the Financial Services and Markets Act and the Economic Crime and Corporate Transparency Act, specifically mentioning crypto assets. The former said it would support a more “safer adoption of cryptocurrencies” and planned to cut red tape in the financial sector to attract more investors to the UK; the latter planned to further strengthen the fight against illegal finance.
This could expose issuers such as Tether and Circle to regulation by the country’s market regulator. Chancellor Rishi Sunak said earlier the plan would “ensure that the UK financial services industry remains at the forefront of technology and innovation.”
No plans to include algorithmic stablecoins
It’s also worth noting that the UK Treasury does not appear to be planning to include “algorithmic stablecoins” in the legislation, saying they do not guarantee stability, an example of which is the severe decoupling of the UST. The spokesperson further explained:
The government has made it clear that certain stablecoins are not suitable for payment purposes because they share characteristics with unsecured cryptoassets…We will continue to monitor the broader cryptoasset market and stand ready to take further regulatory action if needed.
Further reading:UST is blockchain evil blood? SBF talk: different in nature, UST mechanism is transparent; FTX community partner: LUNA debt ceiling is the key
South Korea is expected to speed up the formulation of the Basic Law on Digital Assets, which will be implemented in 2024
In addition, according to a report by the local South Korean media “Yonhap News Agency” yesterday (15), the Korean Financial Services Commission and the Financial Supervisory Authority have begun to urgently investigate and monitor the trend of LUNA events, and are expected to speed up the formulation of the “Digital Assets Basic Law” including consumer protection. , which is planned to be implemented in 2024.
The South Korean financial regulator stated that due to the current lack of relevant legal basis, it has no right to request data from the Terra platform or to investigate and supervise the situation. A financial sector official said:
We are following the overall situation and trends related to the LUNA incident, but there is no way for the government to respond immediately… I have the authority to regulate AML in token transactions, but not the authority to intervene in this price crash.
He also said that the domestic virtual currency industry will grow even stronger if the financial authorities have the opportunity to discuss the won-based stablecoin and DeFi system.
U.S. Treasury Secretary Yellen: UST is highly risky, and stablecoin legislation needs to be accelerated
The Motion Zone reported last week that U.S. Treasury Secretary Janet Yellen also emphasized during a Senate Finance Committee hearing:
A stablecoin called TerraUSD experienced a crash and lost value. I think that shows that this is a fast-growing product and at the same time there is a risk of rapid growth.
She further pointed out that it is very important and urgent for Congress to pass legislation on stablecoins, and called for relevant regulations to be completed by the end of the year.
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